127-134.
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This fight between Danzo and Sasuke happens in Naruto Shippuden Episode 209: Danzo's Right Arm. More information about Itachi comes out in this episode as well.
To simply answer the question... NO, Sasuke does not die. Where the heck did that come from?
naruto manga 480 thru 490
Watch Episode no 133, 134 of Naruto 1st season during the fight of Naruto and Sasuke this scene comes in...
I think it's episode 107 or around it.